FOX Business: The Power to Prosper
Fueled by a buying binge in the energy sector amid $91-a-barrel oil, Wall Street reached the finish line on Tuesday with modest gains, putting a stop to the Dow’s three-day slump.
The Dow Jones Industrial Average rose 34.43 points, or 0.30%, to 11671.88, the Standard & Poor's 500 gained 4.73 points, or 0.37%, to 1274.48 and the Nasdaq Composite picked up 9.03, or 0.33%, to 2716.83. The FOX 50 added 2.19 points, or 0.24%, to 911.91.
While the blue chips’ early rally of 66 points was cut in half, the bulls on Wall Street still managed to rebound from an unprovoked afternoon tumble and send the Nasdaq Composite to its highest close since December 2007.
“It’s almost the opposite of yesterday when we opened in the hole and spent all day climbing out of the hole. Today we opened at the highs and then spent all day giving it back,” Ted Weisberg, a veteran NYSE trader at Seaport Securities, told FOX Business. “But the overall tone remains positive and the lines of least resistance are still on the upside.”
Most of the Dow's 30 members headed north, led by Bank of America (NYSE:BAC) and Intel (NADSAQ:INTC). The index's weakest performers were AT&T (NYSE:T) and Verizon (NYSE:VZ), which slumped after its Verizon Wireless unit unveiled plans to sell Apple's (NASDAQ:AAPL) iPhone.
The Nasdaq Composite hit new 2011 highs as tech stocks like Research in Motion (NASDAQ:RIMM) and Applied Materials (NASDAQ:AMAT) rallied.
The mini rally comes as Wall Street has showed impressive resiliency in recent days, shaking off a key court ruling that rocked shares of big banks, December's weaker-than-expected jobs report and global concerns on Monday about China's monetary policy and Europe's sovereign debt mess.
Energy stocks provided leadership, rallying more than 1.6% as the outage in a key Alaskan oil pipeline reached its fourth day, sending oil to its biggest gain since December 1. Individual stocks like Transocean (NYSE:RIG) and Halliburton (NYSE:HAL) enjoyed even stronger gains. Crude jumped $1.86 a barrel, or 2.08%, to $91.11.
Of course, the energy sector's enthusiasm for higher oil prices was offset by the potential negative impact on consumer spending. Shares of retailers like Macy's (NYSE:M) and Best Buy (NYSE:BBY) lost ground as higher gasoline and heating oil prices could weigh on consumers' ability and willingness to pay for discretionary items.
The basic materials sector rallied nearly 1% amid strength from metals, led by a 1.99% jump for copper to $4.339. Gold gained $10.30 a troy ounce, or 0.75%, to $1,384.00. The higher prices nudged up miners like Rio Tinto (NYSE:RIO) and Freeport McMoRan (NYSE:FCX).
Traders were also zeroed in on earnings season, which began after Monday's close when Alcoa (NYSE:AA) beat the Street with EPS of 24 cents, but narrowly trailed estimates with revenue growth of 4% to $5.7 billion. Alcoa's stock gave back some of its recent surge in the wake of the mixed report. On the other hand, home builder Lennar (NYSE:LEN) jumped 7% after blowing away estimates with a fourth-quarter profit of 17 cents a share and revenue of $860 million.
Meanwhile, the euro gained ground against the dollar for the second day in a row, rising 0.22% to $1.2977 ahead of Portugal's highly-anticipated auction of nearly $1 billion of bonds on Wednesday. Despite a slew of reports to the contrary, Portuguese officials continue to insist it will not need to accept a bailout like Ireland and Greece did.
Wall Street had little reaction to a new report from the Commerce Department showing U.S. wholesale inventories unexpectedly slipped by 0.2% in November, the first decline in 11 months.
Verizon’s (NYSE:VZ) Verizon Wireless officially announced plans to offer Apple’s (NASDAQ:AAPL) iPhone 4 in early February. The 32-gigabyte version of the popular device will sell for $299.99 with a two-year contract. The move was widely signaled but could hurt rival AT&T (NYSE:T), which had been the iPhone’s exclusive carrier.
Advanced Micro Devices (NYSE:AMD) CEO Dirk Meyer resigned as the chip maker said it believes "a change in leadership" will accelerate its ability to grow quickly. The chip maker formed a committee to search for a new CEO and appointed CFO Thomas Seifert as the interim CEO. AMD also said it sees fourth-quarter sales of $1.65 billion, compared with the Street’s view of $1.62 billion.
Talbots (NYSE:TLB) plummeted 17% after warning it will likely post a non-GAAP loss of 15 cents to 19 cents a share for the fourth quarter, significantly trailing estimates for a loss of just 2 cents a share. The women's apparel maker blamed it on a 6% decline in same-store sales so far in the fourth quarter.
MBIA (NYSE:MBI) surged 21% after the bond insurer reportedly won an appeal of a ruling challenging its 2009 restructuring. More than a dozen banks had challenged a restructuring deal they said left MBIA undercapitalized and potentially unable to pay claims, Reuters reported.
Intel (NASDAQ:INTC) agreed to pay graphics chip maker Nvidia (NASDAQ:NVDA) $1.5 billion over five years to settle a patent dispute. Under the deal, Intel will be permitted to use some Nvidia patents.
Sears (NASDAQ:SHLD) soared 6% after projecting fourth-quarter EPS of $3.39 to $4.12, blowing away the Street’s view for just $3.09. For fiscal 2011, Sears forecasted EPS of $1.16 to $1.88, compared with calls for just 91 cents. Sears said its companywide U.S. same-store sales declined 1.7% in December.
SuperValu (NYSE:SVU) widely missed estimates with an non-GAAP profit of 24 cents a share, sparking an 11% plunge in the No. 3 U.S. supermarket chain’s stock. Analysts had called for EPS of 31 cents. SuperValu also posted revenue of $8.67 billion that trailed estimates and took an axe to its 2011 earnings guidance.
General Motors (NYSE:GM) is once again mulling buying back part of Ally Financial, its former GMAC auto loan business, in an effort to improve dealers’ access to wholesale credit, The Wall Street Journal reported. The move comes after Ally turned down a $5 billion GM bid for its wholesale business and GM then acquired subprime consumer lender Americredit for $3.5 billion.
Apollo Group (NASDAQ:APOL) surged 13% a day after the largest U.S. for-profit education company topped estimates with a non-GAAP profit of $1.63 a share. Analysts had been calling for EPS of just $1.35. However, student enrollment at its University of Phoenix slumped 42% and Apollo warned of further declines in student starts.
Tiffany (NYSE:TIF) upgraded its financial guidance due to an 11% surge in holiday-shopping sales. The luxury jeweler now sees fiscal 2011 non-GAAP EPS of $2.83 to $2.88, up from $2.72 to $2.77 earlier. Tiffany sees annual sales of nearly $3.1 billion.
The U.K.'s FTSE 100 rallied 0.97% to 6014.03, Germany's DAX gained 1.23% to 6941.57 and France's CAC 40 jumped 1.58% to 3861.92.
In Asia, Japan's Nikkei 225 slipped 0.29% to 10510.70, Hong Kong's Hang Seng advanced 0.99% to 23760.30 and China's Shanghai Composite gained 0.44% to 2804.05.